THE LEASING INDUSTRY IN

UKRAINE:
Ishchenko Yuliia
ME.m-01a
EXISTING PLAYERS
IN THE MARKET
EXISTING PLAYERS IN THE MARKET
 Financial leasing services can be conducted by banks and other non-bank institutions that are
registered with the state regulator. The leasing activity of banks is performed under the
National Bank of Ukraine License. Until 2017 there were no licensing requirements for non-
bank companies providing leasing services in Ukraine. New licensing requirements were
approved by the Cabinet of Ministers of Ukraine on December 6, 2016; it obligates lessors to
obtain a license for financial leasing activities. Operating leasing activity doesn’t require a
license. According to FSR Commissioner Mr. Zaletov, obtaining a financial leasing license
for a non-bank financial company is not very complicated. It takes about 10 working days
and the cost of the license is less than USD 100. Obtaining the license does not provide a
guarantee for the lessee that the company is legitimate, reputable or trustworthy
EXISTING PLAYERS IN THE MARKET

 As of the beginning of 2018, 551 institutions (including 280 financial companies, 88 banks, and 183
legal entities, which are not financial institutions) had a right to provide financial leasing services. 9
However, numerous financial companies are registered with the FSR for both factoring and leasing
activities, when in reality they are not engaged in leasing at all.
 FSR quarterly reports present a quite confusing picture of the market due to outdated system of data
analysis. It is difficult to distinguish between companies that are only registered to provide services,
and those that are active lessors. FSR commissioner Zaletov sees the need to develop new reporting
standards to make FSR statistics more reliable and transparent. He also suggested that the Leaseurope
statistics might be a model to follow. According to the Ukrainian Union of Lessors (UUL) UUL’s 16
members make up more than 70% of the Ukrainian market. As of January 1, 2018, the value of
outstanding financial leasing contracts of all types amounted to UAH 41,122.9 million (USD 1,465.2
million).
PRODUCTS, CUSTOMERS
AND SECTORS
 The Ukrainian leasing market is dominated by financial
leasing. This is quite typical during the initial stage of
leasing market development since customers are interested
mainly in owning the leased object at the end of the lease.
Operating leasing is not regulated and is not reported so it
is difficult to specify the volume of operating leasing.
Nevertheless operating leasing in Ukraine exists, and is
offered mainly for personal cars.
 The vast majority of leasing beneficiaries (90%) are
companies and only 10% individuals. Approximately 70%
of active leasing clients are SMEs. Leases are concluded in
hryvnia or hryvnia-linked to USD/EUR. Hryvnia lease
interest rates are between 25-30%, while dollar linked
leases average between 10-12%. In terms of lease duration,
the majority of leases are between 2-5 years. Some
stateowned companies have 10 years leases in their
portfolios.
PRODUCTS, CUSTOMERS AND SECTORS
 Average down-payments are between 20-40%, and there has been a gradual decline in the amount required at signing.
Usually leases are not available to businesses with less than 3 years of financial records. The average contract amount is
between UAH 500,000-1 million. The biggest leasing companies tend not to finance small deals. The leasing business is
dominated by transport and agriculture. At the end of 2017 the value of transport transactions amounted to UAH 7,22
billion and agriculture transactions were UAH 5.50 billion. Almost UAH 10 billion worth of contracts were financed in
other sectors (such as construction, industrial equipment, buildings).
 Lessors are most interested in leasing of equipment that is highly liquid and can be easily repossessed and resold. Cars
are the perfect example of that. In the portfolios of most leasing companies, cars are generally subject to financial leases.
Leasing of personal cars is now definitely the most sophisticated part of the Ukrainian leasing market. Some bigger
companies are engaged in “full service agreements” in which the lessor manages the car fleet of a company. The
experience of international companies in doing this type of leasing (AVIS-Ukraine or ALD Automotive) is being
successfully duplicated by other companies, like ULF Finance or OTP Leasing. The number of leased cars in 2016
reached 6 thousand units, an increase of 70% over 2015. According to the UUL, in 2017 the total number of the leased
cars was 5871. The leaders were OTP Leasing (1615 cars), ULF Finance (1249) and Porsche Leasing Ukraine (1117). 15
The second most developed leasing sector is agriculture. In 2016, 650 units of agricultural equipment were
leased. The undisputed leader in this area is OTP Leasing, which leased 450 units.16 In 2017 OTP leasing
increased its leasing contracts to 701 units worth USD 50 million. OTP Leasing financed 80% of the
equipment units financed by UUL (in total all members financed 880 units).17 Among 315 leased tractors in
2017, the most popular were Belarus (89) Case (75), New Holland (55), John Deere (38) and Fendt and
Massey Ferguson (34). 95 grain harvesters were leased; 31 New Holland, 27 Case, 17 John Deere and 11
Class.18 The Ukrainian Agribusiness Club (UCAB) provides detailed information about the structure of
leased assets in the agricultural sector. In 2017, the major equipment leases were tractors (50%), harvesters
(25%) and cultivation equipment (25%)19 .
LEASING DOWN-PAYMENTS
 In markets where risk assessment is not easy and
obvious, down payments play an important role in
mitigating the risk. At present OTP Leasing requires
from their customers in the agricultural sector on
average a 20- 25% down-payment. In 2015, it was
40% on average due to higher risk perceptions.
 In the car business AVIS-Ukraine requires on
average 15-20% down-payment from its
customers.13 The amount of the down-payment in
leasing is like a barometer of the economic
situation. The lower the down-payment, the more
risk a lessor is willing to accept. Lessors feel more
secure as the economic situation is more stable and
payment discipline is higher. There is also more
competition among leasing companies.
LEASING IN THE WORLD
 According to the Global Leasing Report prepared by White Clarke Group, the leasing industry
has experienced significant growth and has introduced new and innovative ways to finance
equipment for companies worldwide. New business volume (NBV) increased by 9.40%, from
USD 1,005.30 billion in 2015 to USD 1,099.77 billion in 2016.
 The biggest leasing market remains the United States with NBV of about USD 330 billion. In
2017, the USA portfolio was dominated by IT & office equipment (31%) and transport (26%),
followed by a10% share for agriculture equipment, 9% construction, 5% industrial and 4%
medical equipment.20 In second place is China with tremendous growth of 61.9% in 2013-
2017, to USD 206 billion NBV. This surge in leasing development is possible in China due to
the involvement of the government. In the 12th FiveYear Plan (2011-15) leasing was identified
as one of the most important drivers for economic growth. In August 2013, favorable VAT rates
for sale and leaseback were introduced. The United Kingdom and Germany are third and fourth
in the world, respectively, accounting for 42% of the whole European market in 2016. Japan is
second in Asia and fifth in the world with NBV USD 43,16 billion.
Thank you
For your attention!